The FTSE 100 <.FTSE> was flat Thursday morning, with retailers lower amid fears of a supermarket price war after market leader Tesco
The FTSE 100 was up 1.06 points, or 0.02 percent, at 5,671.88 by 0943 GMT, supported by financials and miners.
Tesco shares were down 14 percent to a 32-month low after the world's third-largest retailer said it would invest in price cuts and its online business to win back sales, leading to minimal profit growth in its 2012/13 year compared with a forecast for a 10 percent rise.
Shore Capital cut its rating on Tesco to hold from buy.
Tesco traded on a price-earnings ratio of 11, compared with Morrison's 11.7 multiple, Sainsbury on 9.7 and the FTSE 100 at around 10, Thomson Reuters Starmine data showed, based on the market close Wednesday.
There was bad news too from mid-cap Home Retail
Struggling small cap chocolatier Thornton
Alex Wright, manager of Fidelity Investments' UK Smaller Companies Fund, which has 18 million pounds assets under management said he liked the retail sector overall, saying that of nearly all the sectors in the market, it was the one where you can see the biggest differences in performance by stocks.
Even if you think the retail outlook is bad, there are almost always some winners and losers in the retail space.
Pay-TV group BSkyB
Royal Dutch Shell
That came after Chevron
Supporting the index were banks <.FTNMX8350>, with Royal Bank of Scotland
We welcome this decision to further de-emphasize the company's less profitable, riskier and more capital intensive operations, Gary Greenwood, analyst at Shore Capital said.
Shore Capital, however, retained its sell rating on RBS reflecting ongoing economic challenges.
There was relief for investors in Ashmore
Investors were also looking ahead to a Spanish sovereign debt auction, 2012's first real test of demand for debt from the euro zone's weaker states.
In terms of domestic economic news, the spotlight was on the Bank of England's Monetary Policy Committee meeting, with no change to interest rates or the quantitative easing program anticipated.
(Additional reporting by Tricia Wright; Editing by Dan Lalor)